Wage Theft Is Costing Workers $50 Billion a Year in Stolen Pay

Eli Horowitz

Even when workers win judgments in court, owners often claim they lack the assets to pay. (Photo credit: Eli Horowitz)

At the intersection of West 100th Street and Broadway, in a fenced-in area spanning six storefronts and flanked by a NYPD vehicle, workers were getting ready to protest outside of an Indian restaurant called Manhattan Valley. Efren Caballero De Jesus, a former worker there, smiled as volunteers passed out fliers and signs to restaurant and delivery workers, nail salon employees, home attendants and organizers. Even New York Assemblywoman Linda Rosenthal braved the December cold to stand in solidarity with former employees of Indus Valley, now called Manhattan Valley.

What do we want? Enforcement of the labor law! When do we want it? Now!” the group chanted. Phuman and Lakhvir Singh! Sweat Shop Bosses!”

In December 2015, 10 workers learned what part of a $700,000 court judgment for wage theft against PS Brothers Gourmet, Inc., owned by brothers Phuman and Lakhvir Singh, they were owed. The judgment came after the Singh brothers sold the restaurant to Spectrum Restaurants LLC, owned by Bhupinder Kumar, who now operates the restaurant as Manhattan Valley. Although the judgment made clear that the Singh brothers, not Kumar, were responsible for the stolen wages, a court later ruled that Kumar must pay around $110,000 toward the $700,000 judgment as a transfer of debt from the sale. Kumar has thus far made good on his monthly payments, but the Singh brothers have not paid the workers a penny of the remaining $590,000 or so balance.

As outrageous as that situation sounds, it is not uncommon.

Wage theft — any refusal to pay wages, benefits, tips or overtime — is epidemic in New York and the United States. Approximately $50 billion in wages are stolen every year from workers nationwide, according to a 2014 Economic Policy Institute (EPI) report. In 2012, federal and state departments of labor and lawyers recovered at least $933 million in wages, which is less than 2 percent of the amount estimated stolen.

According to EPI researchers and community organizers, when workers report wage theft to government agencies and lawyers, cases are routinely dismissed or settled for unsatisfactory amounts. Additionally, many victims are afraid to speak up for fear of losing their jobs, revealing their status as undocumented or because they can’t afford legal costs and time. Even when victims do win judgments in court, owners often claim they lack the assets to pay. Because wage theft lawsuits are typically civil cases, guilty bosses rarely face the threat of jail time.

In the case of Indus Valley, the workers’ lawyer, Carmela Huang, said the Singh brothers haven’t filed for bankruptcy, but have told her and the court they don’t have the funds to pay. Workers from Indus Valley said they’ve seen the Singh brothers inside Manhattan Valley since the time of the sale, and Kumar’s lawyer confirmed that Lakhvir Singh was hired as a consultant to the new Manhattan Valley. The Singh brothers and their lawyer did not respond to phone calls, emails or in-person visits to Manhattan Valley.

Escaping responsibility

JoAnn Lum, executive director of the National Mobilization Against Sweatshops (NMASS), the non-profit group organizing workers at Manhattan Valley, believes weak labor laws and their lack of enforcement are the main reasons why wage theft occurs.

Even when you don’t pay minimum wage or overtime, under the current law, you can easily escape responsibility,” she said.

Lum said that owners evade payment by selling or changing the name of their businesses and by hiding their assets and then claiming bankruptcy.

There’s nothing lawyers and judges can do,” she said. If you steal something from a store you could get arrested, but if an employer steals $1.8 million [from employees], nothing happens.”

The Singh brothers have been sued before for wage theft and yet continue to operate several businesses. In 2014, they reportedly reached a settlement of $225,000.

The Department of Labor received a complaint against Indus Valley and, following an investigation, recovered wage underpayments and returned them to workers,” said New York State Department of Labor spokesman Josh Rosenfeld. He did not respond to questions about the current case.

Although the workers’ chances of receiving the roughly $590,000 still owed by the Singh brothers are low, they haven’t given up. Salomon Perez has been fighting for his money for many, many years. At the December rally, he and other workers took turns telling their stories.

We were paid $3 an hour and our tips were also stolen,” said Perez. Me and my coworkers went to the Department of Labor to make a complaint. It took them six years to do anything about it but the bosses still didn’t want to pay us. They say they don’t have any money to pay us but they’re making so much money with their other businesses.”

According to NMASS, the Singh brothers’ current businesses include The Dakota Bar, Columbus Gourmet Deli, City Market Café and the Bergdorf Goodman employee café, all of which continue to operate while the court judgment remains unpaid. Workers are calling for a boycott of those businesses.

SWEAT bill

For Perez and his fellow workers, the protest wasn’t only about the Singh brothers and one unpaid judgment, but also about the many workers across the city facing similar situations. Perez called on everyone to support Rosenthal’s Securing Wages Earned Against Theft (SWEAT) bill, which could help workers collect stolen wages.

The SWEAT bill would make it easier to freeze the assets of business owners so they cannot get out of paying court judgments. Workers would do this by placing a lien on employers’ property at the onset of a case so that employers cannot change the name of their business, go out of business or sell it to an LLC and hide behind new ownership. The SWEAT bill passed the New York State Assembly in 2016 but has yet to pass the State Senate. Still, Rosenthal said she is hopeful it will pass during this legislative session.

Huang said that had the SWEAT bill been enacted in time, the workers would have been able to freeze the assets of the Singh brothers early on in the case, preventing them from selling the business or liquidating their assets. However, the bill would not put owners behind bars, nor would it shut down their businesses — demands that lawyers, workers and organizers believe would further deter wage theft.

You know they [employers guilty of wage theft] have ice in their hearts and in their veins, but they make my blood boil,” Rosenthal said, rallying the crowd back in December.

Imagine you’ve worked hard, you leave your apartment at 5:00 in the morning, you get on the train, you work many, many hours a day. You miss birthdays, you miss school concerts, you miss important family events. Why? Because you’re dedicated to making a living for your family. But what happens when there are owners like the Singhs and others who do not pay you? Your blood, your sweat, your tears are for naught.”

Power of organizing”

Wage theft affects more than just restaurant and frontline workers. Writers who aren’t paid for freelance assignments, nurses and home attendants who aren’t compensated for overtime, even white collar workers who are pressured to log up to 100-hour weeks are a few examples of unpaid labor outside the restaurant industry. Nevertheless, the impact of stolen wages is greatest on low-wage workers, who need the bare minimum to pay rent and put food on the table.

Ross Eisenbrey, one of the EPI researchers from the 2014 study, said workers lose an average of $2,634 dollars a year out of the $17,616 they earn through lost tips, lost overtime pay and wage theft. Although wage theft is a federal misdemeanor, Eisenbrey said there hasn’t been a federal prosecution of wage theft in 20 years. With five times more cases of wage theft reported than 20 years ago, complaints fall through the cracks. Eisenbrey points out that there’s approximately $14 billion a year in larceny, the legal term for theft, which is routinely prosecuted criminally, and $50 billion a year in wage theft, which is rarely enforced. He said it is hard to get attorneys to take these cases.

He believes the best way to get people their wages is to prevent wage theft from happening in the first place. He said that the public needs to prioritize addressing wage theft and demand that guilty bosses are prosecuted criminally and be forced to pay much more in damages.

Lum, with NMASS, agrees. And she sees the protests against the Singh brothers as part of a larger movement. She hopes the workers recover their wages and is working to organize others to mobilize against systemic injustices.

I think the most important thing is the public know about it [wage theft], and that more workers know about this,” said Lum. That’s the power of organizing.”

Eli Horowitz is a sports and social justice reporter, with a master’s degree in journalism from Columbia University. Follow him on Twitter @CoachHorowitz13
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